It's time for eBay to say goodbye to StubHub.
That was the takeaway from a letter sent by Elliott Management Corp. to eBay, advising the eCommerce giant that the time has come to shed both StubHub and its classified ads business in favor of a deeper focus on its core online retail marketplace.
Elliott and its affiliates hold a 4 percent stake in eBay.
“Elliott believes that eBay is worth far more — but change is urgently needed to address both public perceptions and real business issues,” the activist hedge fund said in prepared remarks, noting that all three businesses could function more efficiently and profitably as separate entities rather than all existing under the single eBay umbrella. The eCommerce giant has had a rough year on the market, with its stock price down 22 percent over the last 12 months, though today the share price was up 12 percent in pre-market trading.
According to Elliott, eBay could see its valuation grow to between $55 and $63 a share by the end of 2020 if it focuses on its core business.
Elliott's letter to eBay further opined that the eTailer, moving forward, needs to free up capital for investments in operational efficiency and sales growth. The letter also accused eBay of having misallocated resources, spent wastefully and operated under an inefficient structure in the past, before offering to collaborate with management in the future to drive greater value for shareholders.
As of this time, eBay has offered no official response to the communication from Elliott.